People are using fewer checks when they purchase goods and services. The Federal Reserve bank processed 269 million checks for payment in 2008, but that amount is dropping steadily, with only 63 million checks processed in 2014. More people are choosing to use debit cards or other noncash payments because of the convenience of these types of payments, and businesses are also converting paper checks to electronic payments. But when someone wants to pay you with a personal check, you need to be sure that the bank will honor the check when you cash it.
Contact the Bank
The simplest method to verify that funds are available in the account to cover a check written is to call the bank that the check is drawn on. Banks generally offer a verification that the funds are present in the account and are available, if you provide some basic information. Have the following information available:
- The account owner's name
- The account number
- The address printed on the check
- The account owner's driver's license or ID number
- The amount and date of the check
Tell the bank representative that you want to verify funds for a check. The bank will not tell you the account balance, but will tell you if the check you are holding will clear if cashed at that moment. If the bank will not provide the information to you without the okay of the account owner, have the account owner speak with the bank representative first and give his identifying information.
Just because funds are available when verified does not mean that funds will be available when the check is presented for payment. Other checks or withdrawals may be subtracted from the balance before your check is presented.
Take the Check to the Bank
Taking the check to the bank it is drawn on to present it for payment is the most direct way to verify funds. If the check was given to you for a purchase, have the writer of the check accompany you to the bank, and make sure that you either have cash or have exchanged the check for certified funds before you transfer the sold property.
If the bank charges a fee for you to cash the check where you are not a customer and the writer of the check is with you, have him cash a check and pay you with cash, or ask the bank to exchange the check for a certified or bank check.
Convert the Check to Electronic Payment
Businesses can opt for converting checks to electronic payments by using a processor that offers this service. These processors take the information from the check and use it to initiate an electronic transaction from the bank account referenced on the check. This speeds up the process of payment, but doesn't necessarily verify funds. As part of its benefits, a check processor may guarantee that the check will clear if the merchant follows the processor's policies.
Practical Advice for Accepting Checks
The Small Business Administration offers advice for businesses and individuals accepting checks:
- Accept checks from local people and local banks.
- Only accept checks for the amount of the purchase
- Do not accept starter, unnumbered or other nonpersonalized checks
- Require identification and make sure that the signature on the check matches the signature on the ID.
- Make sure that the check is dated for the day it is written. Do not accept a postdated check